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Core renewal at fruit co-op

by
Judie Steeves - Kelowna Capital News

posted Jun 16, 2013 at 6:00 AM

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Radio ads encouraging Okanagan apple growers to truck their fruit across the international border may have appealed to some orchardists, but the local packinghouse is confident changes being made there will bring them back next year.

Grower contracts with the B.C. Tree Fruit Co-operative, formerly the Okanagan Tree Fruit co-operative, have to be signed at the beginning of the calendar year, and it was then it became obvious that some key growers had decided not to return.

However, the board is confident growers who have left the local co-op will be back when they see the new efficiencies and the progress that’s been made on the sale of surplus properties that were owned by the co-op.

With sale of the downtown Kelowna packinghouse this spring, ultimately there won’t be any facilities in this city except controlled atmosphere storage, says CEO Alan Tyabji, as the co-op downsizes to better match the volume of fruit now being produced in the valley.

Better efficiency is essential to growers’ bottom line, and updated facilities are one way to move toward lower operating costs.

Instead of the $40 million future upgrading discussed two years ago, Tyabji says he has achieved the same with less than $10 million, by renovating instead of building from scratch.

He was hired last fall immediately following the co-op agm, when two new board members replaced long-time board members, a pattern over the past few years that saw many of the long-time co-op directors replaced with new ones.

Changes Being Made

One of those new board members elected in 2011 was Kelowna grower Colin Pritchard, who is currently vice-president of the BCTFC board, and who was very critical of the way the old board acted—prior to his election.

He says Tyabji has made tremendous changes and that his hiring has resulted in a good attitude amongst staff and reduced overhead costs for the co-op.

Modernization efforts currently underway will result in the Winfield facility becoming one of the most modern and up-to-date packing plants in Canada—maybe even North America.

Such state-of-the-art equipment will make the co-op more efficient and the fruit more marketable because of the soft-touch technology being employed, he noted.

Although the co-op has lost some growers, he said the membership is ‘always in flux,’ but he says, “Some who have left have seen what we’re doing and I expect they’ll be back when their contracts elsewhere are up,” he commented.

“U.S. co-ops really only want our Ambrosias,” he added.

Ambrosias are a Canadian apple, discovered in Cawston and grown under licence to the Okanagan Plant Improvement Company, which is owned by the B.C. Fruit Growers’ Association of B.C.

Executive-director of PICO, John Kingsmill explains that there are only two companies who are exclusive licensees, with the sole right to propagate Ambrosias in Washington State, and they are restricted to the amount of acreage that can be planted there.

“The variety is doing very well internationally,” he notes.

However, he doesn’t feel that’s the reason U.S. plants are attracting B.C. growers. Instead, he feels B.C. growers are disappointed at the returns they’ve been receiving in recent years from the co-op here. It’s been struggling with surplus properties on its books and old equipment in its packing facilities, he explained and labour costs here are typically higher than they are south of the border, he added.

U.S. Packers Aggressive

One of those co-operatives interested in attracting B.C. growers is Gold Digger Apples in Oroville, Washington, a 75-year-old co-operative that declares on its website that it is “an aggressive company providing competitive returns to quality growers.”

It has been buying spots from local radio stations to encourage disenchanted local growers to consider shipping to them.

It packs and ships fruit from both members and non-members and markets through Chelan Fresh Marketing.

Other Washington State packinghouses are also accepting fruit from B.C. growers.

BCTFC president Rob Dawson concedes the loss of some growers to U.S. packers will have some impact on the BCTFC, a recent amalgamation of five valley grower-owned co-operatives, but he warns that those growers could face some problems such as issues shipping bins across the border.

While the amalgamation of the province’s main tree fruit co-operatives into a single co-op was touted as a move toward higher efficiency and economy, he points out there’s “no magic in amalgamations, unless you make use of it.”

He noted the benefits aren’t likely to be instant.

First, the united co-operatives have to work on selling some of their surplus properties in order to realize some of the savings of the larger scale they’re now operating on.

Another strategic plan is in the works, he said and there’s been some consolidation within the co-op.

North & South Centers

Tyabji said ultimately, the plan is that the co-op’s packing operations will be centred in the north and the south of the valley, with the head office and marketing remaining in Kelowna, along with the Roanoke Avenue CA storage facility in the north end.

A $7.5 million upgrade is underway at the co-op’s Winfield packinghouse and CA storage facility, with the support of $2.5 million in funding toward that project from the federal-provincial AgriFlex program.

It’s expected to be complete in time to handle this year’s harvest and will include a $1 million up-to-date sizer, an electronics upgrade, a new bin filler using next-generation softer-handling technology and set up to handle large volumes of fruit.

New brine-chilling technology will be added to the storage facility.

In future, Tyabji envisions adding a $.5 million robotic palletizer to that facility as well.

The Kelowna plant on Clement Avenue has been sold, but no details will be released until all the conditions are off that deal this summer.

As well, there may be a buyer for the adjacent Vaughn Avenue property, where the cherry line is located, but the idea is that a portion of the property would be leased back to the co-op at first.

The apple line in Kelowna wouldn’t be needed unless there’s an increase in crop size, and Winfield could handle that fruit with its increased efficiency, he said.

The co-op’s downtown Summerland property may have been leased to a movie production company, since it’s not expected it will be needed again as a packing plant until newly-replanted trees begin to crop.

An agreement to rent most of the Penticton receiving plant has just been entered into, said Tyabji, but the lakeshore Naramata plant is still empty and there’s nothing on the radar for that property, he said.

A $2 million upgrade is underway to the cherry line in Oliver, which will make it even more modern than the fairly new line in Kelowna, and it is a similar size to the Winfield facility.

The co-op also has CA storage facilities in Keremeos and Osoyoos.

Last year, the co-op announced that it would no longer handle organic fruit, in order to make the operation more efficient.

The BCTFC is also talking to growers about reducing the fruit coming in by 15 per cent, by dropping varieties such as Reds and Goldens which are not getting good enough returns for growers, said Tyabji.

“We want growers to take out trees that aren’t making money. We encourage them to replant,” he said.

It’s especially important that the provincial government extend the replant assistance program to help revitalize the industry, he noted.

“Replanting is key to the financial health of the grower body, and revitalization of orchard inventory. Growers need government funding to support their investments in renewing orchards,” he said.

Government Support Vital

Winfield grower Penny Gambell, a former BCFGA president, agrees, and says the government could also be much more supportive of retail agriculture.

Customers should also be vigilant to ensure they’re purchasing local, B.C. fruit and supporting the local industry.

The orchard industry got sold out when the federal government brought in a buyout program for grape growers, she claims. And, that industry enjoys limitations on imports as well—while it’s free trade in apples.

In the 1990s the industry farmed 20,000 acres in the valley, but today that’s down to about 7,000 acres, she figures.

And, she has no intention of taking her business to the U.S. “We benefit from the Canadian system, with its medicare, economics and other policies, and when we take it south, we’re paying wages to non-Canadians.

“We should find the solution here,” she said.

She’s confident that the BCTFC board is working to downsize infrastructure and reduce costs so returns to grower can improve, and generally make it a successful business.

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